ChatGPT costs $700,000 daily, maker may go bankrupt in 2024: Report

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OpenAI spends roughly $700,000 per day (around Rs. 5.8 crore) to run ChatGPT and Microsoft and other recent investors are covering these costs out of their own pockets. They, however, could turn off the tap if Sam Altman-led company doesn't turn a profit soon and it may go bankrupt by the end of 2024, according to a report published in Analytics India Magazine.

“Microsoft’s $10 billion investment in OpenAI is possibly keeping the company afloat at the moment. But on the other hand, OpenAI projected an annual revenue of $200 million in 2023, and expects to reach $1 billion in 2024, which seems to be a long shot since the losses are only mounting,”the report said, and noted that in May this year, OpenAI’s losses doubled to $540 million ever since it started developing ChatGPT. 
 

The report noted that even though CEO Sam Altman does not own equity in OpenAI, the company shifted from being a non-profit to profit way back.
 

The report highlighted the shrinking user visits to ChatGPT website and referred to SimilarWeb’s data which showed that after hitting a record high of 1.9 billion user visits in May this year, the generative AI chatbot witnessed 1.7 billion user visits in June and only 1.5 billion in July.
 

The report also referred to a user on X who argued a major reason for the decline in visits to ChatGPT website could be API cannibalisation wherein most companies are prohibiting employees from using the generative AI chatbot for work, but are allowing them to use the API to leverage the large language model (LLM) in other workflows. 
 

But Analytics India Magazine further stated: “It is rather presumptuous of OpenAI to assume that the decline in users is just because people have started using the API to build their own products. Interestingly, the twist over here is the rise of open source LLM models. Meta’s Llama 2, in partnership with Microsoft, is allowing people to use the model for commercial purposes. 
 

“So, instead of going for what OpenAI offers, which is a paid, proprietary, and restricted version, why would people not go for an easily modifiable Llama 2?”
 

Another challenge for the company is the graphics processing unit (GPU) shortage. Altman earlier had underscored lack of GPUs on the market affected the company's capacity to improve and develop new models. Earlier, media reports stated that the company had filed for a trademark application for ‘GPT-5’ 0which further indicates that the company wants to keep on training models.  
 

ChatGPT would also face a challenge from Elon Musk who is building a rival chatbot. “Interestingly, his idea of building a ‘TruthGPT’, which is not as politically biased as ChatGPT, was found interesting by a lot of people,” the report said. He even bought 10,000 NVIDIA GPUs to get ahead. On the brighter side, OpenAI’s shift to a paid version may have raked in a lot of moolah but “the financial numbers on this are still hazy”.

Even then, if this LLM-focused company goes into IPO, it may be bought out by bigger companies. Arguably, this might be one of the exit strategies for the investors, the report added.